Physics not running in AV-Sync
The AV-Sync option changes how the timeline runs the animation - so that instead of always processing each frame, instead it will skip frames where necessary to ensure that the playback matches the 'actual' expected frame rate. This is to allow the animation to be syncronised with another time-bound source such as an audio track - where slowing down the video rate would result in the audio and video becoming out of step.

So, in order to prevent the video from lagging behind, Blender skips video frames where it has been unable to keep up - to get it back 'in step'. This does, however, mean that Blender is unable to complete the Rigid Body (and other simulation) processing for each frame and since the simulation for each frame is dependent on the immediately preceeding frame this means that the simulation cannot be completed if any frames are skipped - so the animation will stop as soon as an unbaked or uncached frame is skipped.

This means that when using the AV-Sync mode you should always use the Bake option of the Rigid Body (or other simulation) cache to ensure the simulation is fully calculated before you run the animation on the timeline.